[Federal Register Volume 61, Number 117 (Monday, June 17, 1996)]
[Rules and Regulations]
[Pages 30498-30501]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-15092]
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DEPARTMENT OF AGRICULTURE
7 CFR Part 1208
[FV-95-702FR]
Fresh Cut Flowers and Fresh Cut Greens Promotion and Information
Order--Postponement of Payment of Assessments
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This final rule establishes a rules and regulations subpart
under the Fresh Cut Flowers and Fresh Cut Greens Promotion and
Information Order (Order). The Order is authorized under the Fresh Cut
Flowers and Fresh Cut Greens Promotion and Information Act of 1993.
This rule implements a provision of the Order concerning the
postponement of the payment of assessments. This action establishes
procedures for the postponement of the payment of assessments to the
National PromoFlor Council.
EFFECTIVE DATE: June 18, 1996.
FOR FURTHER INFORMATION CONTACT: Sonia N. Jimenez, Research and
Promotion Branch, Fruit and Vegetable Division, AMS, USDA, P.O. Box
96456, Room 2535-S, Washington, DC 20090-6456, telephone (202) 720-
9916.
SUPPLEMENTARY INFORMATION: This rule is issued under the Fresh Cut
Flowers and Fresh Cut Greens Promotion and Information Act of 1993 [7
U.S.C. 6801 et seq.], hereinafter referred to as the Act, and the
Order.
This rule has been issued in conformance with Executive Order
12866.
This rule has been reviewed under Executive Order 12778, Civil
Justice Reform. It is not intended to have retroactive effect. This
rule will not preempt any State or local laws, regulations, or
policies, unless they present an irreconcilable conflict with this
rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under Sec. 8 of the Act, a
person subject to the order may file a petition with the Secretary
stating that the order or any provision of the order, or any obligation
imposed in connection with the order, is not in accordance with law and
requesting a modification of the order or an exemption from the order.
The petitioner is afforded the opportunity for a hearing on the
petition. After such hearing, the Secretary will make a ruling on the
petition. The Act provides that the district courts of the United
States in any district in which a person who is a petitioner resides or
carries on business are vested with jurisdiction to review the
Secretary's ruling on the petition, if a complaint for that purpose is
filed within 20 days after the date of the entry of the ruling.
Regulatory Flexibility Act
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), AMS has considered the economic impact of this action on
small entities.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened.
Only those wholesale handlers, retail distribution centers,
producers, and importers who have annual sales of $750,000 or more of
cut flowers and greens and who sell those products to exempt handlers,
retailers, or consumers are considered qualified handlers and
[[Page 30499]]
assessed under the Order. There are approximately 900 wholesaler
handlers, 150 importers, and 200 domestic producers who are qualified
handlers.
The majority of these qualified handlers would be classified as
small businesses. Small agricultural service firms have been defined by
the Small Business Administration [13 CFR 121.601] as those having
annual receipts of less than $5 million. Statistics reported by the
National Agricultural Statistics Service show that 1994 sales at
wholesale of domestic cut flowers and greens total approximately $559.6
million while the value of imports during 1994 was approximately $382
million. The leading States in the United States producing cut flowers
and greens, by wholesale value, are California, which produces
approximately 49 percent of the domestic crop, followed by Florida,
Colorado, and Hawaii. Major countries exporting cut flowers and greens
into the United States, by value, are Colombia, which accounts for
approximately 60 percent, followed by The Netherlands, Mexico, and
Costa Rica.
The Act and the Order provide for the postponement of assessments.
This rule establishes procedures for the postponement of the payment of
assessments to the Council, which lessens the regulatory impact of the
Order on large and small businesses alike. Therefore, AMS has
determined that this rule will not have a significant economic impact
on a substantial number of small entities.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 [44 U.S.C.
Chapter 35], the information collection requirements contained in the
Order have been approved by the Office of Management and Budget (OMB)
under OMB number 0581-0093 and have an expiration date of January 31,
1997.
Background
The Act authorized the Secretary of Agriculture (Secretary) to
establish a national cut flowers and greens promotion and consumer
information program. The program is funded by an assessment of \1/2\
percent of gross sales of cut flowers and greens which is levied on
qualified handlers. The program is administered by the National
PromoFlor Council (Council) under the supervision of the Department of
Agriculture (Department). Section 1208.55 of the Order provides for the
postponement of assessments.
The Council met on September 11, 1995, and recommended that, in
order for a request for the postponement of assessments to be granted,
the requester should comply with the following: (1) Submit a written
opinion from a Certified Public Accountant stating that the handler
making the request is insolvent or will be unable to continue to
operate if the handler is required to pay the assessment when due and
(2) submit copies of the last three (3) years' federal tax returns. The
Council stated that these two requirements are needed to verify that
the qualified handler is financially unable to make the payment of the
assessments due and that the postponement of payment, if granted,
complies with the requirements set forth in the Order. In addition, the
requester should submit to the Council a completed application form
(``Application for Postponement of Payment of PromoFlor Assessments'').
A proposed rule regarding the Council's recommendation was
published in the Federal Register on November 27, 1995 [60 FR 58253].
That rule contained a proposed new subpart for rules and regulations
under the Order. In addition, it proposed the establishment of
procedures for the postponement of the payment of assessments to the
Council.
The deadline for comments on the proposed rule was January 26,
1996. Two comments were received. One comment was received from the
Council, and another comment was received from a greenhouse operator.
The Council commented that the proposal did not address the
consequences if a qualified handler does not meet the 30-day deadline
for requesting the postponement of the payment of assessments. The
Council stated that it should not be required to consider requests that
are made after the deadline. However, the rule already states that, for
a request for postponement of assessments to be granted, the request
must be in writing no later than 30 days after the assessments were
due. Therefore, the Council can not consider any late requests.
The Council also commented that the qualified handler should be
required to complete and sign a handler report for each month the
assessments are owed or to list sales and assessments due for each
month in the form of a signed statement. The second commentor also
commented that the reporting requirement needs to be met so that the
Council can track what is owed. The Department agrees that the
qualified handler should file a qualified handler report for each month
assessments are due even though the postponement of the payment of
assessment has been granted and has revised the procedures accordingly.
In addition, the Council commented that it should not be required
to audit a qualified handler who has gone through the postponement
process. Section 1208.71 of the Order requires qualified handlers to
maintain and make records available for inspection by agents of the
Council or the Secretary. The Department believes that an audit of the
books of the qualified handler requesting the postponement of the
payment of assessments may be necessary in order to verify any
information provided and, if necessary, pursue collection of past-due
assessments. Therefore, the Department disagrees with this comment.
The Council further commented that the number of extensions for the
postponement of the payment of assessments be limited to one. The
second commentor stated that the postponement should be open ended. He
commented that the business should not have to pay until it recovers or
goes bankrupt.
The Department agrees that the postponement of the payment of
assessments should not be indefinite. It is the purpose of these
procedures to bring qualified handlers into compliance as soon as
practicable after giving them the opportunity to recover from a
financial difficulty. Accordingly, the comment recommending that the
postponement period be open ended is denied, and the Council's comment
on limiting extensions of the postponement periods is granted.
The proposal has been revised to state that one extension of the
postponement of the payment of assessments may be granted covering the
same period previously requested. The extension of the postponement may
not exceed six (6) months. If an individual requests that another
period be postponed, that person must file another application for the
postponement of the payment of assessments of the second period. The
qualified handler may request the postponement of the payment of
assessments for a maximum of two periods only. Each period postponed
could include a maximum of six (6) months. The payment of assessments
for the second period of postponement, if granted, may not be extended.
The payment period must not exceed the length of the postponement
period. The payment period for the total assessments due, when an
extension and a second period are granted, must begin within one (1)
year after the first postponed month's assessments were originally due.
However, these procedures are not intended to be
[[Page 30500]]
retroactive for those individuals who requested postponement of the
payment of assessments before this rule becomes effective.
The Council will have the right to audit the records of those
requesting an extension or those requesting more than one postponement
period to verify the validity of the request(s). If it is determined
that the qualified handler is capable of meeting the obligations of
payment of assessments, the qualified handler will be given the
opportunity to start paying the assessments. If the qualified handler
refuses to pay the assessments due, the Council will refer the debt to
the Department for collection after notifying the qualified handler.
The second commentor stated that the requirements for requesting
the postponement of the payment of assessments should be simple, such
as an officer of the company certifying that the company is not able to
meet the terms of the payment of his vendors and that dividends are not
being paid. Such statement could be provided by a Certified Public
Accountant.
The Department believes that the procedures established by this
final rule are reasonable and are not burdensome to a qualified handler
that requests a postponement of the payment of assessments. Therefore,
this comment is denied.
In addition, the second commentor stated that the Department should
address producers' financial hardship due to imports of certain
flowers. Although this issue may be cause of concern to certain
producers and handlers, it is not relevant to this rulemaking.
In addition, to the changes described above, the Department has
made a few editorial changes to the proposal in order to simplify the
regulatory text.
This final rule provides the following:
Section 1208.100 will provide that the definitions for this subpart
are the same as those prescribed in Sec. 1208.1 through 1208.24 of the
Order.
Section 1208.150 will provide for the postponement of the payment
of assessments under certain circumstances. Section 1208.55 of the
Order states that ``The Council may grant a postponement of an
assessment under this subpart for any qualified handler that
establishes that it is financially unable to make the payment * * *''
In addition, the Order establishes that the Council shall develop forms
and procedures for a qualified handler to request and for the Council
to grant the postponement of the payment of assessments.
Under these regulations, the period for which the initial
postponement of the payment of assessments is requested may not exceed
six (6) months. If the postponement is granted, the qualified handler
will be exempt from paying assessments beginning with the first month
for which the request for postponement is filed with the Council and
for no more than six (6) months unless an extension is requested and
granted by the Council. Only one extension may be granted for the
postponement period. The qualified handler will be required to file
monthly reports during the postponement period and any extension. The
handler must provide a reason for the request as well as detailed
information concerning the handler's name, address, telephone and fax
numbers, the month(s) for which the request is made, the amount of
assessments due or gross sales per month, the percent or amount of the
outstanding debt to be paid by month after the postponement of payment
is granted, and the starting and ending date for the payment.
The request must be made no later than 30 days after the first
month's assessment of the requested postponement period is due.
Applications postmarked after the 30-day deadline will not be
considered by the Council. In addition, after the postponement period
has concluded, the handler must pay the percentage or amount of the
outstanding assessments agreed upon each month as well as any other
assessments which are due. Assessments due after the initial
postponement period is over will not be postponed further unless an
extension of time to pay such assessment is granted. If an extension of
time is requested, new documentation must be provided for the Council
to determine whether to grant the request. The same procedures used for
the initial postponement request must be followed in requesting an
extension. The extension may not exceed six (6) months. In addition, a
qualified handler may request a second period of postponement of the
payment of the assessments of no more than six (6) months. The same
procedures followed for requesting the first postponement period must
be used. However, the second postponement period may not be extended.
The qualified handler may request the postponement of the payment of
the assessments for a maximum of two periods only. No additional
postponements would be considered by the Council until the assessments
owed for the first two periods have been paid.
The following example will serve to further explain and clarify
this rule. If a qualified handler wants to postpone the payment of
assessments due on cut flowers and greens handled during the months of
January through June 1997, the request for the postponement must be
filed with the Council's office no later than April 30, 1997. April 30
is 30 days after the assessments on cut flowers and greens handled
during January 1997 would be due (March 31, 1997). If the request is
granted, the handler would not have to pay assessments to the Council
in the months of March through August 1997. The first payment on
handlings during January through June 1997 would be due no later than
September 30, 1997. Payments would be made pursuant to a schedule
agreed upon between the handler and the Council.
If the same handler wants to extend the postponement period for an
additional six (6) months, the request must be submitted to the
Council's office no later than the date the first payment was due or,
in this case, no later than September 30, 1997. If the extension is
granted, the deadline for the first payment of the assessments on
January through June 1997 handlings would be on March 31, 1998.
Therefore, in March 1998, the qualified handler would be required to
pay (1) the agreed upon amount of the assessments due on cut flowers
and greens handled in January 1997 as well as (2) the total amount due
in March 1998 for cut flowers and greens handled in January 1998.
If the qualified handler also wants to postpone the assessments due
on cut flowers and greens handled during the months of July through
December 1997, the handler must make that request no later than October
31, 1997, the date 30 days after the assessments on cut flowers and
greens handled in July 1997 would be due. If the request is granted,
the deadline for the first payment of the assessments on cut flowers
and greens handled in July through December 1997 would be March 31,
1998. And, during March 1998, the handler would be required to pay (1)
at least 50 percent of the assessments on cut flowers and greens
handled in January 1997; (2) the entire assessments due on cut flowers
and greens handled in July 1997; and (3) the total assessments due for
cut flowers and greens handled in January 1998.
The Council may conduct an audit of the qualified handler's books
and records at any time to determine whether the qualified handler will
be unable to continue to operate if the handler is required to pay the
assessments when due.
Any late payment will make the postponement null and all
assessments due will need to be paid in their entirety
[[Page 30501]]
at that time. In addition, the Council agrees to forgo any late fee
charges and interest for the duration of the postponement of the
payment of assessments.
After consideration of all relevant material presented, it is found
that this regulation, as set forth herein, tends to effectuate the
declared policy of the Act.
Pursuant to 5 U.S.C. 553, it is also found and determined that good
cause exists for not postponing the effective date of this action until
30 days after publication in the Federal Register because: (1) This
rule establishes rules and regulations in accordance with the
provisions of the Act; (2) the Council has received requests for the
postponement of the payment of assessments and needs rules to
administer the postponement process; and (3) no useful purpose will be
served in delaying the effective date until 30 days after publication
of this final rule.
List of Subjects in 7 CFR Part 1208
Administrative practice and procedure, Advertising, Consumer
information, Marketing agreements, Cut flowers, Cut greens, Promotion,
Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, 7 CFR Part 1208 is
amended as follows:
PART 1208--FRESH CUT FLOWERS AND FRESH CUT GREENS PROMOTION AND
INFORMATION ORDER
1. The authority citation for 7 CFR Part 1208 continues to read as
follows:
Authority: 7 U.S.C. 6801 et seq.
2. In Part 1208 a new Subpart B is added to read as follows:
Subpart B--Rules and Regulations
Definitions
Sec.
1208.100 Terms defined.
Assessments
1208.150 Procedures for postponement of assessments.
Subpart B--Rules and Regulations
Definitions
Sec. 1208.100 Terms defined.
Unless otherwise defined in this subpart, definitions or terms used
in this subpart shall have the same meaning as the definitions of such
terms which appear in Subpart A--Fresh Cut Flowers and Fresh Cut Greens
Promotion and Information Order of this part.
Assessments
Sec. 1208.150 Procedures for postponement of collections.
(a) For a request for postponement of the payment of assessments to
be granted, the qualified handler requesting such postponement must:
Submit a written opinion from a Certified Public Accountant stating
that the handler making the request is insolvent or will be unable to
continue to operate if the handler is required to pay the assessments
when due; and submit copies of the handler's last three (3) years'
federal tax returns. The request must be in writing no later than 30
days after the assessment for the first month of the requested
postponement period is due. Applications postmarked after the 30-day
due date will not be considered by the Council. The qualified handler
must file handler reports with the Council for each month during the
postponement period. The postponement period may not exceed six (6)
months unless an extension is requested and granted by the Council.
Only one extension of up to six (6) months may be granted. Within the
postponement period, the qualified handler will be exempt from paying
assessments beginning with the first month for which the request for
postponement is filed with the Council and for no more than six (6)
months unless an extension is granted. The same procedures used for the
initial request will be used to grant any extension. The written
request must specify:
(1) a reason for the request;
(2) detailed information concerning the qualified handler's name,
address, and telephone and fax numbers;
(3) the month(s) for which the request is made;
(4) assessments due per month or gross sales per month;
(5) total assessments due;
(6) the percent or amount of the outstanding assessment to be paid
each month after the postponement of payment is granted; and
(7) the starting and ending date for the payment of assessments
due.
(b) At the end of the postponement period, the qualified handler
must pay the percent or amount outstanding of assessments agreed upon
each month as well as any other assessments which are due. An extension
of time for payment of postponed assessments, if granted, will be for
the same months previously requested and granted. The extension must
not exceed six (6) months. If a qualified handler requests that another
period be postponed, that handler must file another application for the
postponement of the assessment for the second period using the same
procedure which was followed in requesting the first postponement. A
qualified handler may request the postponement of the payment of
assessments for a maximum of two periods of up to six (6) months each.
The payment applicable to the second postponement period, if granted,
may not be extended, and the payment period must not exceed the length
of the postponement period. Payment of the total assessments due, when
an extension and a second period are granted, must begin within one (1)
year after the first postponed month's assessments were originally due.
No additional postponements would be considered by the Council until
the assessments owed for the first two periods have been paid. The
Council may conduct an audit of the qualified handler's records at any
time to determine whether the qualified handler will be unable to
continue to operate if the handler is required to pay the assessments
due. In the event that postponed assessments are not paid when due, the
Council can demand that all such assessments due be paid in their
entirety.
(c) Charges for late payment of assessments as described in
Sec. 1208.52 will not be imposed on assessments for which postponement
of payment has been granted.
Dated: June 7, 1996.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 96-15092 Filed 6-14-96; 8:45 am]
BILLING CODE 3410-02-P